This article was written by Ted Bilich, CEO of Risk Alternatives LLC, located in Arlington, Virginia. Risk Alternatives works with nonprofits and entrepreneurial organizations to help them identify and address threats and opportunities, confront challenges, and put processes and systems in place to achieve their goals. Ted’s mission is to build stronger communities by helping to build sustainable nonprofits and healthy, scalable small businesses. Ted has more than 25 years of experience counseling clients on risk management and complex business issues.

Even in the best of times, nonprofits confront numerous challenges. But these are not the best of times. Facing a world of hyper-partisanship, economic uncertainty, racial unrest, ongoing war, and unpredictable climate change, the average nonprofit leader has her hands full. So what steps should a prudent nonprofit leader take to chart a course forward?

Strategic planning, of course, is essential. A nonprofit needs to understand which mountains it intends to scale and how it intends to measure progress along the way. But in addition to strategic planning, nonprofits need basic orienteering tools to manage the journey. I suggest three: a risk management process, a business continuity plan, and scenario planning. 

Nonprofits Need Risk Management

As I lay out in my new book, Managing Your Nonprofit for Resilience, every nonprofit should have a process in place to identify and address threats before they become crises and opportunities before they pass the organization by. If your nonprofit does not yet have a risk management process in place, consider using the method set forth in that book. 

You begin with a risk inventory – a team exercise where participants look for risks in all functional areas of the nonprofit, as well as your external environment. You then prioritize those risks and capture them in an accountability document called a risk register, which staff can use to track progress in addressing those risks. Finally, you incorporate a “risk cycle” in organization to ensure that risk management is not treated merely as a one-time event, but instead is a living part of organizational culture.

A nonprofit that institutes the process just described will have a much better understanding of its current capabilities. It will also encourage all staff members to think like leaders and speak up about things that worry them and opportunities for positive change. 

Nonprofits Need a Business Continuity Plan

Even the best risk management process, however, will not anticipate every potential contingency. In wintertime, pipes might freeze, ruining your office. A crazy active shooter might endanger your staff and clientele. A phishing attack may render your computers unusable. No matter what the business interruption might be, your nonprofit needs a simple, robust, business continuity plan that tells staff how to operate in an emergency. 

A business continuity plan cannot be a lengthy, exhaustive document. Back in 1989, first responders in Prince William Sound, Alaska, had a 1,000+ page emergency plan in case of an oil spill. Predictably, that plan was of little value when the Exxon Valdez ran aground and began spewing oil into the pristine waters. The “plan” was simply too big, too complex, and too specific. 

Instead of a mammoth document that attempts to contemplate and address all possible contingencies, a solid nonprofit business continuity plan should be extremely short – no more than about 10 to 15 pages. (You can find a template here.) It should note, for example, who should be made aware of the emergency, how that will be accomplished, and what the nonprofit would like to do in any emergency within the first few hours and days of any emergency incident. It should list important emergency contact information (insurers and policy numbers, first responders, legal counsel, and so forth.)

Imagine your nonprofit had such a document, and that it resided as a PDF on the smartphones of all staff members. In an emergency, all of your staff would be literally on the same page.

Nonprofits Need to Engage in Lean Scenario Planning

A nonprofit with a risk management process and a business continuity plan would feel much safer and more agile in the face of uncertainty. One additional tool, however, can provide additional clarity and comfort: scenario planning. In scenario planning, a nonprofit imagines possible future events in order to make better decisions in the present. 

When we help clients perform scenario planning, we urge them to imagine various scenarios, such as the sudden exit of a senior leader, a significant reduction in funding, or a significant increase in budget resources. For each scenario, participants ask three questions: (1) How likely is this scenario? (2) If this scenario came about, what would we want to be ready to do at that time? (3) Given the answers to the first two questions, what if anything do we want to be doing now to increase our ability to respond appropriately if this scenario comes true?

By using those three questions, in order, a nonprofit can identify areas of leverage – small steps that can be taken now that could lead to big payoffs down the road. Equally important, participants in this exercise may gain insight into potential vulnerability before it’s too late.  

Conclusion

Take these three steps – create a risk management process, adopt a business continuity plan, and engage in scenario planning. You will make better decisions every day, and you’ll also sleep better at night.